Economists are prone to call the consequences of many decisions “unintended,” and thus assume the actors are genuinely ignorant of these effects or would otherwise not choose the actions that cause them. However, I must give these economists qua economists credit for a minimum knowledge of the effects of unions and strikes, and assume they knew the likely outcomes of their actions. If they did not understand these consequences, they surely cannot be worthy of what some consider a noble title: economist. FULL ARTICLE by Chris Brown
Source link: http://blog.mises.org/10558/economists-on-strike/
Economists on Strike?
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When someone goes on strike and gets a raise, causing someone to get laid off, the employed person should be held accountable for their actions and forced to compensate the unemployed person.
Chris,
Thanks for the article. Everyone always asks Qui Bono? The more important question is always Qui Malo?
M. R. Stoddard,
You’re in good company with Bastiat.
Economists work?
“It is difficult to get a man to understand something when his salary depends upon his not understanding it.” ~ Upton Sinclair
“unintended consequences” – that’s been the Australian way ever since that pretentious little runt Bob Hawke, the mainstay of the Labor party ran for office riding on the back of Malcolm Fraser, but working behind the scenes with his goons to discredit the man just because he had once held up a copy of Atlas Shrugged in their faces. Signs like “Vote Mal – Eat Pal” (a brand of dog food) were painted everywhere they could find any open space on any wall. Malcolm Fraser left his post a sad and broken man and little Bob in so many words said that the “consequences were unintended”.
As for economists being members of trade unions, in socialist Australia or anywhere else, tells me that they are certainly not of the Austrain school and therefore deserve no further scrutiny. Such “economists” with degrees from socialist unviersities like The University of New South Wales, are the drones hired solely to churn out socialist propaganda and steer the unsuspecting towards a so-called One World economy. The bulk of the foreign students in Australian universities come from South-East Asia, an already bubbling cauldron Socialism at its worst. And Australian politicians are more that willing to fully exploit this ready-made political/economic powder keg to establish a White Australian presence in a region of the world where they are commonly known as The White Trash of Asia.
For any action, unintended and unforeseen consequences can perhaps be forgiven. None of us is perfect. The problem, of course, is that the adverse consequences (of any action – policy – union – . whatever) most loudly excused as being ‘unintended’ after the fact were almost never unforeseen. THAT is the unforgivable part.
this lesson has to be re-learnt afresh by every generation of policymakers. ( and unionists I suppose, given the article’s key theme).
“Unintended conseqences” is a phrase that is intended (heh) to cover all consequences of an action. Sure, the union members may knowingly intend to hurt others with their actions, but there may still be consequences that they didn’t intend, like, for example, lower attendance to the universities, one thing that they arguable are not trying to achieve.
But this effect is the same effect that occurs anytime anyone anywhere gets a raise or more benefits. Or even if we narrow it down to people who are going to cease working at their present job without more pay, it is still a consistent, regular pattern, as people are frequently shopping around for work and giving their employers the ultimatum of meeting the offered salary of the competition or lose their employee. While I don’t like the government backing of unions, which is a problem, the fact that people would basically quit their jobs in demand for higher pay, as a group, and appoint an individual or small group to act as negotiators on their behalf, is completely legitimate and within their rights. Yes, other people pay for it, but again, by that logic, any increase in pay ever is bad, because somebody has to pay for all of them. If the striking workers aren’t worth the extra money, they should just be forgotten, and if they are, then there is no problem as they are earning that pay increase. It is only the government’s interference, which can go both way, that is a problem.
The forerunner to the phrase “unintended consequences” is “Hell is paved with good intentions”. Every paving in hell is commemorated to the one who “meant well” even if the victims of his “good intention” are suffering “unintended consequences”.
I can’t see how a union of economists bargaining violates voluntarism at all.
Some people (economists) agree to bargain together. Then they either come to an agreement with some other people or they don’t. If the price they ask is too high they work elsewhere or not at all.
When my brother and I went to buy a truck together we bargained with the dealer. Should we have been concerned that the money we were saving from negotiating was “coming from somewhere”? Of course not. If our highest price was too low for them they would tell us “Sorry, no deal”.
When people come together they don’t gain special attributes, but they don’t lose the ability to negotiate voluntarily either.
If that was all unions did, Austrians wouldn’t see a problem in it either. In most cases unions intimidate new workers with violence, pass minimum wage laws, and convince government cronies to force companies to hire from the union directly. In extreme cases unions begin movements like Apartheid in South African to prevent those willing to work at lower wages from taking their jobs.
I’m getting a laugh out of striking ambulance workers here. Their union has signs planted all over the city saying “On Strike To Save Lives.”
Doesn’t this article fall into the fallacy of the fixed pie. It seems like an article like this could be used by socialists to prove the point that, as they say, “if someone gets rich then someone else gets poor.” Isn’t it possible that consumers of the education at the university value the product enough to pay higher prices. After all people do not engage in voluntary trade unless it is beneficial.
I was just thinking the same thing damien. Anyone who provides a service has the right to stop providing that service (strike) until they get the wage they desire. They prefer leisure time to work. The market grows and shrinks as a result of this. I wonder if this was a really complex test for the Austrians here, or just a misguided hit piece that breaks every tenant of Austrian economics.
There is nothing whatever wrong with an employee withdrawing his labor in pursuit of his own selfish aims. That is freedom; anything else would be servitude.
Nor is there anything wrong with an employer sacking him in favor of a more tractable worker. It is only when the law protects unionists that the law stinks.
However, the motivation of the strikers in this case is not necessarily avaricious. It is possible, though unlikely, that they consider their salaries too low to attract fresh talent, and that they therefore have the broader interests of the university at heart.
Another possibility is that they want more pay or perks than the university administrators, instead of the other way around. With this view I have some sympathy.
the most important aspect of the story was omitted – were non-strikers intimidated, or was coercion exercised by the union in any way against “scabs”?
if not, then it’s just part of the rough and tumble of industrial relations. self-interest is not unique to (union-member) economists (adam smith blah, blah, blah…).
damian, nathan, lysander, and newson,
Thanks for the comments. I hope my post will address them.
Obviously voluntary unions can be compatible with the free market although empirically this is doubtful. As Rothbard said (MES, p. 713):
“Economics cannot itself decide on ethical judgments. But in order for anyone to make ethical judgments rationally, he must know the consequences of his various alternative courses of action. In questions of government intervention or union action, economics supplies the knowledge of these consequences.”
And of course individual bargaining is fundamental to employer-employee negotiations in a free market. But unions are based on collective bargaining and (again) Rothbard says it well (MES, p. 715):
“. . . because unions do not own workers and therefore do not sell their labor, collective bargaining of unions is an artificial replacement for the smooth workings of ‘individual bargaining’ on the labor market.”
The article is meant to point out the (catallactic) consequences of unions, voluntary or forced. Of course voluntary unions can exist in a free market, although Rothbard wrote they would be very unlikely and are almost always based on force. This is why he wrote that if individuals knew the consequences of union activity it is likely that there would be less of that activity. I am saying economists should know such effects and would be less likely to engage in union behavior. I conclude with Rothbard (MES, p. 713):
“Knowledge of economics is therefore necessary, though not sufficient, for making a rational ethical judgment in these fields. As for unions, the consequences of their activity, when discovered (e.g., displacement or unemployment for oneself or others), will be considered unfortunate by most people. Therefore, it is certain that when knowledge of these consequences becomes widespread, far fewer people will be ‘prounion’ or hostile to ‘nonunion’ competitors.”
I think there is a sad irony that comes from economists who promote and are a part of union activity, who should know better.
Chapter 10 of MES is very good on this issue: http://mises.org/rothbard/mes/chap10d.asp
All your criticisms apply to anyone who leaves a job because they believe they are not being paid enough. They are the very same arguments put forth by many left leaning economist for why the government must force people who work for schools back to work, or rail workers with the threat of jail for walking off. They offer justification for more government coercion.
You will get into an undesirable argument by making blanket statements about unions, just as making blanket statements about government. Government is not inherently evil, only involuntary government. You strive to claim the union only wishes to help itself. What is wrong with this? Perhaps they are underpaid? Perhaps with more pay, more people would be influenced to be professors. Perhaps better professors could more efficiently teach students, and actually require fewer faculty and lower overall budgets?
It seems you argument should be focused towards the inability of the union to improve the lot of the individuals in the union, and not on the effects on the consumer or other workers.
While I think that many pro-union arguments are spurious, I am a little concerned by this apparent knee-jerk reaction against collective bargaining of any source. As has been stated well by others, a greater concern ought to be whether the strike is enforced by violence (either directly by the strikers or on their behalf through state mandate). When bargaining of any kind (collective or otherwise) is influenced by violence or its threat, it should not take an economics degree to guess what kind of deal will be made.
Providing no evidence (despite a response by the author) that the strike in question is enforced by violence, I must assume that participation in the strike is voluntary. I don’t doubt that there is some degree of social pressure to participate. We might implore union members to no indulge in this activity, yet I think that this kind of pressure, to some extent, is inevitable in any human association.
Under the assumption that no forcible coercion is employed to enforce the strike, it must be inferred that the strikers unanimously believe that they deserve to be paid more and that they can achieve their goals without adverse consequences. It is certainly true that many people (again, whether negotiating individually or collectively) do not take full account for the consequences of their negotiations. Deals can and often are made that have unintended consequences.
I agree that economists ought to have a better understanding of the possible consequences. I also suspect that many of these don’t really, having been indoctrinated in socialist dogma rather than well-considered economic cause and effect. Yet it is not outside the realm of possibility that they could be well-informed of the possible outcomes. They may hope to reduce employment or wages in administration, for instance, as was suggested by someone else.
All this being said, I do reserve some skepticism for over-reliance on collective action. My study of economics has convinced me that there tend to be mounting costs with greater centralization of decision-making. Even when the arrangements are entered into voluntarily and conducted without force or fraud, the costs of policing the management increase. Eventually, you may reach a point (from the perspective of individuals) at which the costs of regulating the conduct of union leaders exceed the benefits. At this point, the union becomes ripe to better serve the interests of union leaders over the individual members who thought that they could improve their situation collectively.
In conclusion, I am convinced that individuals may find some short-term benefit in bargaining collectively. The prospects of negotiating better wages is greater if the employer must replace one hundred workers than if it must replace only a single worker who refuses to work at the current wage. Rothbard presented some arguments concerning oligopsony that I frankly found unconvincing. In markets that are deep enough, I agree that wages will rise toward the higher range of indeterminant zones. However, not all markets are deep. Perhaps the teachers should consider why their market is better developed. They would probably find government edicts as the culprit.
In any case, in the short-term, a self-interested economist may find his situation improved by bargaining collectively. Economists are self-interested like anyone else.
Instructors on our campus in Kansas may or may not join our union; we are not a closed shop and we respect the right of each individual to associate and to disassociate.
I support collective bargaining because our college is governed by lawmakers and indeed, our campus is operated by the government. When the government gives up taxation, gives up eminent domain over my property and my body, and gives up law making, I will gladly give up my membership in our union. Until then, I see a very real need for the counterbalance which our collective bargaining contract provides. In other words, one very important intended consequence of collective bargaining on our campus is to protect individual rights, such as the right to free speech.
In your example, I assume the university cannot terminate striking members of the faculty. In our situation, we are prevented by law from going out on strike. I support the freedom of unions to strike and the freedom of employers to say no to union demands and to terminate those on strike. I think that kind of freedom would change both the intended and the unintended consequences.
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